Sources say MGM mulls management overhaul
Metro-Goldwyn-Mayer Inc is talking with potential strategic partners to revive the studio with a stand-alone plan that may involve overhauling top management, said two sources familiar with the situation.
A representative for MGM declined comment when pressed by Reuters
One source familiar with the studio said debt-ridden MGM -- which is pursuing a stand-alone plan after an auction for the studio drew disappointing bids -- has talked with Summit Entertainment, Spyglass Entertainment and former Yahoo Inc executive Terry Semel.
The stand-alone plan, which involves filing for a prepackaged bankruptcy, is being studied and would involve $1 billion in capital, including $500 million in new equity and a mandate to make anywhere from four to 10 movies a year, sources have said. [ID:nN07188713]
Two other people familiar with the situation said on Tuesday that revamping MGM's management, including replacing CEO Mary Parent, was being mulled in its negotiations with strategic partners.
"Clearly they're interested in having new management," said one of those people.
"I think it would be very unlikely they'd go forward without changes in management and staff," said another person familiar with the creditors' views.
The lenders' steering committee, led by JPMorgan Chase & Co (JPM.N), Highland Capital Management and Anchorage Advisors, had also met with former News Corp (NWSA.O) President Peter Chernin, another source told Reuters.
But that person said Chernin was not interested in pursuing the opportunity at this time.
Representatives of the committee have also had talks with executives at Liberty Media Corp's (LINTA.O) Overture Films, sources have said.
Time Warner Inc (TWX.N), which put in a $1.5 billion bid for MGM in March, remains interested in buying the studio, sources said.
MGM received a waiver on debt payments from creditors until July 14. The studio, home to more than 4,000 film titles, said in November it was considering selling the company. But as the auction progressed, buyer interest in the company dwindled.
Despite a film library that includes the James Bond and Pink Panther franchises, MGM has been struggling to create new hits. It is also coping with slowing DVD sales as consumers move to viewing online.
A $2.85 billion buyout in 2005 by a group including four private equity firms, Providence Equity Partners, TPG, Quadrangle Group and DLJ Merchant Banking Partners, and media companies Sony Corp (6758.T) and Comcast Corp (CMCSA.O), also saddled the company with debt. (Additional reporting by Megan Davies and Jui Chakravorty and Caroline Humer in New York.
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